The Smart Money Turns Bearish on China

Despite the recent rally, options traders are positioning for a pullback in China. Maybe you should too.

Some options investors are taking a trust but verify approach toward China.

They are buying bearish puts on the primary proxy of China stocks, the iShares China Large-Cap exchange-traded fund (ticker: FXI), even after Premier Li's July 9 speech to support growth and employment. He said 7% economic growth was the "bottom line," suggesting the government would use policy tools to spark economic growth, which sparked a stock...